What happens if I go over my allownace?

dj2006
dj2006 Posts: 21 Forumite
in ISAs & tax-free savings
Early on last (tax) year I put £1300 into an existing ISA, later on I then opened a new ISA & put the remaining £2300 in. In a subsequent conversation with someone from the new ISA company they said I still had the remaining £1300 to go, so thinking maybe I'd made the mistake I put it in. But then checking my records I find I was right & I've actually gone over for that year. So what's going to happen? Will they suss eventually? Will they just return the money? Or will it just sit there not attracting any interest, or will I have to pay tax on any interest for that money?

Hmmm...
«1

Comments

  • Hungerdunger
    Hungerdunger Posts: 964 Forumite
    First Post First Anniversary Combo Breaker
    Here's your answer
    "The trouble with quotations on the Internet is that you never know whether they are genuine" - Charles Dickens
  • dazeruk
    dazeruk Posts: 313 Forumite
    First Post First Anniversary Combo Breaker
    edited 23 April 2009 at 1:47PM
    I think you're gonna have the full £3,600 returned ie the £2,300 plus the later £1,300 deposit.

    By putting the first £1,300 into your existing ISA that became your ISA subscription for 2008/2009. You then opened a second ISA, which is allowable but only for transfer purposes, and deposited £2,300 into that. That would count as two subscriptions within a single tax year which is not allowed. Your new ISA company only knew know about the deposit of £2,300 into their ISA product and therefore stated that you had £1,300 remaining from your yearly ISA allowance. You shouldn't have been saving with them at all.

    I think the tax office will catch up on this at some point.
  • dj2006
    dj2006 Posts: 21 Forumite
    That's terrible! So the 3600 allowance is into one account only for that tax year? I didn't know that, not sure they made that clear either.

    Oh dear...
  • BruceyBonus
    BruceyBonus Posts: 1,142 Forumite
    First Post First Anniversary Combo Breaker
    dj2006 wrote: »
    That's terrible! So the 3600 allowance is into one account only for that tax year? I didn't know that, not sure they made that clear either.
    You would have agreed to subscribe to only one ISA in that tax yeat when you signed the terms and conditions.
  • Baldur
    Baldur Posts: 6,565 Forumite
    BruceyBonus wrote: »
    You would have agreed to subscribe to only one ISA in that tax yeat when you signed the terms and conditions.
    You would have declared that you had not and would not subscribe to any other Cash ISA in that tax year when completing the application forms for both accounts.
  • david78
    david78 Posts: 1,654 Forumite
    edited 24 April 2009 at 8:48PM
    Well I have different information. If you have exceeded your ISA allowance in one year (or pay into more than one ISA), but not in the previous year, then HMRC will write and tell you about it, with a leaflet explaining the rules. They will then quite probably let you off for your error.

    If you ring the ISA helpline and explain it was an oversite they will sort out a letter for you.

    If you do this in two consecutive years, they close and void the last account you opened. You get your money back less a deduction for tax on any interest you earned.
  • dazeruk
    dazeruk Posts: 313 Forumite
    First Post First Anniversary Combo Breaker
    david78 wrote: »
    Well I have different information. If you have exceeded your ISA allowance in one year, but not in the previous year, then HMRC will write and tell you about it, with a leaflet explaining the rules. They will then quite probably let you off for your error.

    If you ring the ISA helpline and explain it was an oversite they will sort out a letter for you.

    If you do this in two consecutive years, they close and void the last account you opened. You get your money back less a deduction for tax on any interest you earned.

    Different information about what?

    The OP hasn't just exceeded his ISA allowance by £1,300 they've subscribed to two ISAs in one tax year.
  • spike87
    spike87 Posts: 548 Forumite
    First Post First Anniversary Combo Breaker
    I have accidentally subscribed to two ISAs this year. I phoned HMRC and explained the situation and they said they'll let me off. I can keep both ISAs open! Didn't ask for any details or anything.
  • Mikeyorks
    Mikeyorks Posts: 10,369 Forumite
    First Anniversary Combo Breaker
    dj2006 wrote: »
    That's terrible! So the 3600 allowance is into one account only for that tax year? I didn't know that, not sure they made that clear either.

    Oh dear...

    The strict interpretation from the ISA Guidance is (my italics) :-


    12.37 There are two situations in which excess subscriptions must be removed from an ISA.
    • The first is where the investor subscribes to a valid combination of ISAs (one cash ISA and one stocks and shares ISA), but subscribes more than £7,200 in total.
    • The second is where the investor subscribes to a invalid combination of ISAs(more than one cash ISA and/or more than one stocks and shares ISA) and subscribes more than £7,200 in total and/or more than £3,600 to cash ISAs.


    ...... however. As you haven't subscribed more than £7200 it's likely you'll get the benefit of a new leniency being shown by HMRC over the past 2 years. And simply get a letter, in due course, telling you not to do it again.
    If you want to test the depth of the water .........don't use both feet !
  • dj2006
    dj2006 Posts: 21 Forumite
    righto, thanks a lot. i'll call them today & be apologetic.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.1K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.2K Work, Benefits & Business
  • 607.9K Mortgages, Homes & Bills
  • 173K Life & Family
  • 247.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards